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Rising house prices put focus on affordability

Consumer expectations about house prices have bounced back to pre-EU Referendum levels after a period when the immediate ramifications of the vote were unclear. Now, according to data from the Building Societies Association Property Tracker survey, almost half of consumers (49%) expect house prices to rise over the next 12 months. Just 10% expect them to fall.

But, as a result of this rebound in house price expectations, people are facing greater affordability challenges in buying their own home.

Over two-thirds of consumers (67%) report raising a deposit as their primary challenge to buying their own home, up from 64% in December 2016. And 49% now say that getting a large enough mortgage is a barrier, up from 44% in December.

Two of the other common challenges: Affording monthly mortgage payments and lack of job security have remained relatively stable since the Referendum, but are still clearly seen as substantial barriers to home ownership.

In March, 42% of consumers said that affording monthly mortgage repayments was a barrier, down from 44% in December 2016. This remains persistently high, despite the fact that rates for many new mortgage products have fallen. Lack of job security, chosen by 34% in March and December, remains elevated, indicating that uncertainty over the economic outlook persists.

Commenting, Paul Broadhead, Head of Mortgage Policy at the BSA said:
“The worst case scenarios for the economy immediately after the UK voted to leave the EU clearly didn’t come to pass, and this has fed through to people’s higher expectations for future house prices. However, we are only just starting the negotiations around the exit process. Consumer views on the housing market, and their prospects in it are likely to alter as the negotiation proceeds.

“Today, with actual house prices still rising above earnings in many regions, raising a deposit is an intractable issue. It particularly impacts first time buyers, but second steppers aren’t immune. Higher consumer price inflation will also adversely affect people’s ability to build a deposit in the year ahead.

“No single action can fully address the housing issues consumers face, but increasing the supply of homes would go a long way to limit rising prices. A period of house price stability would in my view be welcome.”

Notes to Editors:
Read the full March 2017 Property Tracker report here.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,021 adults for fieldwork undertaken between 1st – 2nd March 2017. Total sample size was 2,022 adults for fieldwork undertaken between 1st - 2nd December 2016. The surveys were carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).